More
The real import of the story, of course, is that President Obama is picking sides. Bankruptcy proceedings are adversarial, and the goal is for an impartial judge or trustee to balance the competing claims in light of the rule of law, the existing contracts, and the ultimate good of all the parties.
Obama has decided a priori, however, that the interests of the United Auto Workers come first. Forget the fact that many of the people who now own Chrysler debt are secured creditors, and thus entitled by centuries of precedent to a preferred position in the disposition of Chrysler's assets, ahead of the government (which lent unsecured TARP funds) and the UAW (to whose health-care fund Chrysler is obligated to pay cash).
What appears to have happened, according to published reports, is that holders of about $6 billion in Chrysler debt were offered $2 billion, and then $2.25 billion. When they asked for more, Obama got mad and broke off the negotiation.
Imagine telling your bank that you've decided to pay off your mortgage in full, but you’re only going to give them 35 cents on the dollar, take it or leave it. Then when they protest, you lose patience, walk out of the room, and go on national television to say that your bank is a bad actor, they've exhausted your patience, and now they’ll have to settle for a big fat zero. And by the way, maybe the White House press corps will start spreading nasty rumors about them.
That analogy in no way exaggerates the situation that Chrysler's debtholders find themselves in. It's very, very hard to escape the conclusion that the President of the United States has decided to declare war on a group of people who have lent their own money in pursuit of an honest return, and are guilty of nothing more looking out for their own interests.
As it seldom has before, the US government under Barack Obama is directly superseding private contracts, ex post facto. They can change the rules on anyone, anytime, for reasons they only have to explain through a cowed and uninquisitive press.
The next time you have money to invest, give that some very careful thought.
Just curious how many people here had heard of this before I posted it.